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Saskatchewan Mining

On-again, off-again Vale potash project at Kronau off again – by Bruce Johnstone (Regina Leader-Post – November 20, 2015)

http://leaderpost.com/

Vale Potash’s proposed $3.5-billion solution potash mine at Kronau is being put on hold as the Brazilian mining giant waits for market conditions in the potash industry to improve, says a spokesman for Vale Potash in Regina.

The company announced the decision to suspend work on the mine in a public letter to the community of Kronau, 28 km southeast of Regina, and the surrounding rural municipality. Vale says the recent feasibility study still shows a compelling case for a mine in Kronau someday, but market conditions make it difficult to finance the project right now.

“Give the global economic conditions, I don’t think it’s a big surprise,” said Matthew Wood, senior project leader for Vale Potash, in an interview Thursday.

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Stung by weak prices, potash miners look to specialty products – by Rod Nickel (Reuters U.S. – Novmeber 18, 2015)

http://www.reuters.com/

WINNIPEG, MANITOBA – Nov 18 Potash miners, facing another round of tough negotiations with big buyers in China and India, are looking to support sinking profits by boosting sales of higher-margin specialty products, according to top executives.

The pink fertilizer’s price has fallen sharply this year, under pressure from bloated capacity, soft grain prices and weak currencies in Brazil and India, spurring Potash Corp of Saskatchewan, Mosaic Co and Belaruskali to slice output.

Miners face further pressure as they start talks in coming weeks with China’s Sinofert Holdings Ltd for a 2016 supply contract, which generally sets a global price floor.

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NEWS RELEASE: Q3: PotashCorp Reports 2015 Third-Quarter Earnings of $0.34 per Share (October 29, 2015)

http://www.potashcorp.com/

Key Highlights

  • Third-quarter earnings of $0.34 per share1, including $0.03 per share related to notable non-cash charges, primarily in phosphate
  • Annual earnings guidance adjusted to $1.55 – $1.65 per share
  • Preparing for closure of Penobsquis mine and inventory shutdowns at Cory, Allan and Lanigan

CEO Commentary

“Broader emerging market concerns have weighed on customer sentiment, contributing to a weaker fertilizer environment in the second half of 2015,” said PotashCorp President and Chief Executive Officer Jochen Tilk. “In response, we are moving forward the permanent closure date of our Penobsquis, New Brunswick mine and planning inventory shutdowns in December at three of our Saskatchewan mines.

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Uranium miner sees China and India as key growth markets – by Ashley Redmond (Globe and Mail – October 20, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Canada is the world’s second largest uranium producer in the world, next only to Kazakhstan, according to the World Nuclear Association. And we export about 85 per cent of what we mine.

But the uranium sector went into a downturn in recent years, especially after Japan’s post-tsunami nuclear reactor meltdown caused that country to shut down reactors, with ripple effects in other countries. However, with new reactors being built, especially in Asia, and the expected restart of more Japanese reactors in the next few years, some analysts are calling for demand, and spot prices, to increase.

Even with decreased global demand, the value of Canadian-origin uranium exports in 2013 amounted to about $1-billion, according to government figures. Exports are mainly to the United States, Europe and Asia.

Tim Gitzel, president and chief executive officer of Saskatoon-based Cameco Corp., oversees the largest high-grade uranium mines in the country: McArthur River and Cigar Lake, both in Saskatchewan.

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[Saskatchewan Uranium waste] Gunnar cleanup to exceed $250M, 10 times estimate – by Alex MacPherson (Saskatoon StarPhoenix – October 17, 2015)

http://www.thestarphoenix.com/

The cost of cleaning up an abandoned uranium mine in northern Saskatchewan is expected to exceed $250 million, more than 10 times the original estimate – and the provincial and federal governments are divided on how the burden will be shared.

Located on the northern shore of Lake Athabasca near Uranium City, about 800 kilometres north of Saskatoon, the Gunnar uranium mine was abandoned in 1964. The site remained littered with radioactive tailings, asbestos-laced buildings and other waste for more than half a century.

The original mine operator, Gunnar Mining Limited, no longer exists.

In 2006, the federal and provincial governments signed an agreement to rehabilitate the site and reduce further ground and water contamination. The project was originally estimated to cost no more than $24.6 million and take 17 years, according to Natural Resources Canada documents.

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Mining tycoon Lukas Lundin promotes Denison-Fission merger to skeptical retail shareholders – by Peter Koven (National Post – October 7, 2015)

The National Post is Canada’s second largest national paper.

TORONTO – Mining tycoon Lukas Lundin has joined an effort to convince Fission Uranium Corp.’s skeptical retail shareholders that they should approve a friendly merger with Denison Mines Corp.

The shareholder vote is scheduled for Oct. 14, and executives at both companies acknowledged on Tuesday they do not know which way Fission’s investors will go. The vast majority of the stock is held by retail shareholders, some of whom are loudly resisting the deal with Denison, one of Lundin’s companies.

As a result, Lundin himself is speaking with retail investors in Toronto this week to make the case for the $280-million, all-stock deal. For him, the argument is pretty simple.

“We’re trying to become the go-to name in the industry,” he said in an interview. “When uranium moves up again, we should move quite strongly because there’s nowhere else (for investors) to go. You have Cameco (Corp.) and Denison.”

Fission chief executive Dev Randhawa said he appreciates that retail investors would prefer a monster takeover offer from Cameco or Areva to this smaller deal with Denison. But he thinks they are ignoring one simple fact: there is no such deal out there.

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RPT-UPDATE 2-Potash Corp withdraws $8.9 bln takeover bid for German peer K+S – by Greg Roumeliotis and Arno Schuetze (Reuters U.S. – October 5, 2015)

http://www.reuters.com/

NEW YORK/FRANKFURT, Oct 5 (Reuters) – Potash Corp of Saskatchewan said on Monday it had withdrawn its 7.9 billion euro ($8.9 bln) offer for German potash producer K+S , citing a decline in global commodity and equity markets and a lack of engagement by K+S management.

K+S shares dropped 24 percent after Potash announced its decision in a statement, wiping almost 1.5 billion euros off the company’s market value.

An acquisition of K+S would have given Potash Corp an opportunity to realize savings from selling potash within North America from its own Western Canada mines and from K+S’s Legacy mine, which is under construction in the region.

However, senior K+S executives dismissed the Canadian company’s 41-euro-per-share cash bid — which represented a 59 percent premium to the volume-weighted average of K+S’s share price during the prior 12 months — as too low and refused to negotiate.

Since Potash Corp made its offer to K+S privately at the end of May, shares of K+S peers have dropped by around 40 percent amid concerns over weakening demand from China, the world’s largest consumer of potash.

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Plan for cleaning up uranium tailings ready for approval – by Alex MacPherson (Saskatoon StarPhoenix – September 28, 2015)

http://www.thestarphoenix.com/

The cleanup of a derelict northern Saskatchewan uranium mine could move one step closer this week.

The Saskatchewan Research Council (SRC) — which is overseeing the multi-million-dollar Gunnar Remediation Project on behalf of the provincial government — will present its plan to cover the site’s three tailings deposits at a Canadian Nuclear Safety Commission (CNSC) hearing in Ottawa on Wednesday.

Canada’s nuclear watchdog will consider evidence presented by all interested parties, including the SRC and northern First Nations, before making its decision, which is expected in about six weeks, a CNSC spokesman said Monday.

The Gunnar mine site is located near Uranium City on the northern shore of Lake Athabasca, about 800 kilometres north of Saskatoon. The deposit was discovered in 1952 and mining commenced three years later.

When it was operational, the site featured an open pit mine, an underground mine, two acid plants, a uranium mill, and various ancillary buildings. Three tailings deposits totalling some 4.4 million tonnes and a large waste rock pile eventually accumulated on the site.

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Cameco defends safety of uranium mining as Cigar Lake mine opens – by Ian Bickis (Canadian Press/Global News – September 24, 2015)

http://globalnews.ca/

SASKATOON – Cameco’s CEO Tim Gitzel defended the safety of uranium mining as the company opened its operations at Cigar Lake this week amid trying times for the sector.

“Anyone that’s toured these mines, talked to our workers, they can talk to the communities, they can see our statistics, it’s a very safe occupation, and we’re proud to be part of it,” Gitzel said.

Those comments stand in stark contrast to a report released in July by Quebec’s environmental regulation agency (BAPE) concluding after a year of study that it would be premature to allow uranium mining in the province.

The three-person BAPE panel wrote that there are still many uncertainties and “significant gaps in scientific knowledge of the impacts of uranium mining on the environment and public health.”

Gitzel disagrees. “I thought that was a very unfortunate finding in Quebec,” said Gitzel.

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Potash Corp.’s K+S Bid Helped by Commodity Slide, Analysts Say – by Scott Deveau and Jack Kaskey (Bloomberg News – September 24, 2015)

http://www.bloomberg.com/

Potash Corp. of Saskatchewan’s 7.85 billion-euro ($8.77 billion) proposal to acquire its largest European competitor is more attractive after price declines in the Canadian company’s namesake crop nutrient, according to two analysts.

Potash Corp.’s cash offer made in June was rejected by K+S AG of Germany as too low. Since then, spot prices for potash in the U.S. have dropped 12 percent and there have been forecasts for further declines on the export market. On Monday, Mosaic Co., the largest U.S. producer, said it was cutting output and blamed weaker demand.

Share prices of potash miners have fallen accordingly. K+S is down 9.3 percent this month and closed at 30.22 euros in Frankfurt on Wednesday. That makes Potash Corp.’s 41-euros-a-share bid attractive, said Nils-Peter Gehrmann, an analyst with Hauck & Aufhauser, and Jeffrey Stafford at Morningstar Equity Research.

“While we’re certain management believes EUR 41 per share undervalues K+S, we think the offer considerably overvalues the company,” Chicago-based Stafford said in a note Tuesday. He said his fair value estimate for K+S is 24 euros a share.

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NEWS RELEASE: Cameco and AREVA Celebrate Start of Production at Cigar Lake

http://www.cameco.com/

Saskatoon, Saskatchewan, Canada: Cameco (TSX: CCO; NYSE: CCJ) and AREVA officially marked the start of production at the Cigar Lake uranium mine and McClean Lake mill today at the minesite in northern Saskatchewan, Canada.

Cameco president and CEO Tim Gitzel, and Olivier Wantz, member of the executive committee and senior executive vice-president, mining and front end business group for AREVA, welcomed dignitaries including Saskatchewan Economy Minister Bill Boyd and community leaders from northern Saskatchewan, and led a tour of the underground workings.

“I thank all of our stakeholders and partners whose strong support helped us bring this rich and challenging deposit into production,” said Tim Gitzel. “This achievement took 10 years, great perseverance and technical creativity, and I commend the many people who contributed.”

“We are happy to celebrate these two major uranium mining assets in Saskatchewan, the Cigar Lake mine and the McClean Lake mill,” said Olivier Wantz. “Their successful operation demonstrates the determination and expertise of our employees to ensure the safe start-up and continued production.”

Mining at Cigar Lake began in March 2014. The first packaged uranium concentrate was produced in October 2014 at the McClean Lake mill which is majority owned and operated by AREVA Canada Resources Inc.

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Potash Pessimism Clouds Prospects for BHP’s Jansen Project – by David Stringer (Bloomberg News – September 21, 2015)

http://www.bloomberg.com/

BHP Billiton Ltd.’s prospects of building potash into the fifth pillar of its portfolio of big-ticket businesses is looking a long way off. That’s the view of Macquarie Group Ltd., which has a “very pessimistic view” of the market.

The world’s biggest miner’s Jansen project in Canada, which has already consumed about $3.8 billion in capital, is unlikely to be developed unless prices rise, according to Macquarie. The bank has cut its long-term price forecast by 16 percent to $280 a metric ton.

“Our base-case scenario for BHP assumes the indefinite deferral of Jansen’s development,” Macquarie analysts wrote in a note to clients dated Sept. 21. The company will probably favor development of less capital intensive petroleum and copper projects, they said.

Mosaic Co., the largest U.S. producer of potash fertilizer, said Monday it plans to reduce output as low crop prices continue to erode farmer demand for agricultural products.

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UPDATE 3-Potash Corp, K+S not actively discussing takeover -Potash CEO – by Rod Nickel (Reuters U.S. – September 16, 2015)

http://www.reuters.com/

(Reuters) – Potash Corp of Saskatchewan is not actively discussing its takeover proposal with Germany’s K+S, but remains interested in a combination of fertilizer producers that would aid North American potash sales and offer new access to Europe, Chief Executive Jochen Tilk said on Wednesday.

Potash Corp’s standing offer of 7.9 billion euros ($8.90 billion) or 41 euros per share is appealing to K+S shareholders, Tilk said at an investors’ conference in New York organized by Credit Suisse.

“It was attractive when we made it (in July). Marketing conditions have changed, we think it’s even more attractive now,” he said. “I will not put words in K+S shareholders’ mouths but I think most of them feel that is an appropriate offer in terms of premium.”

A K+S spokesman declined to comment. Shares of K+S dipped after Tilk’s comments and closed down 0.2 percent at 33.58 euros in Frankfurt. Potash shares were up 1.8 percent at $25.44 in New York and up 1.3 percent at C$33.51 in Toronto on Wednesday afternoon.

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NDP wouldn’t reverse historic uranium mine decision, Mulcair says – Rod Nickel (Reuters/Globe and Mail – September 10, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

WINNIPEG, Manitoba — Reuters – The New Democratic Party views Canada’s uranium as a “strategic asset,” and would not reverse a rare government decision to allow foreign ownership of a proposed mine, leader Thomas Mulcair said on Thursday.

The uranium industry is unpopular in Quebec, the NDP’s stronghold heading into next month’s election. But it is a key part of the economy in Saskatchewan, where the party hopes to add support.

The governing Conservatives in June made an exception to the country’s longstanding policy requiring uranium mines to be majority-owned by Canadian companies, and approved an application by Australia’s Paladin Energy Ltd.

If the left-wing NDP forms government after the Oct. 19 election, it would not change that decision, Mulcair said during a Winnipeg campaign stop.

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Fission’s uranium price – by Kip Keen (Mineweb.com – September 4, 2015)

http://www.mineweb.com/

There is a big gap between the company’s assumptions and reality.

HALIFAX – First let me say Canadian-junior Fission Uranium has its hands on a delightful discovery with the Triple R deposit. It’s already pretty big, high grade, and set to grow.

It and predecessor companies made the find a few years back in the Athabasca Basin, where the cream of the world’s uranium resides – at least in terms of grade. They recently calculated a 79.6 million pound uranium resource, indicated, at 1.58% U3O8. That’s quite sizeable and high grade by the industry’s standards.

Fission has released an early stage economic analysis (preliminary economic assessment or PEA in Canadian parlance) that puts the price tag at $1.1 billion to get it into production, with a 14-year mine life. It also anticipates pretty low operating costs per tonne – in the mid-teens per pound uranium.

But here’s my beef on the PEA and I’m not alone in having it. Fission (and RPA as the consultant) use $65/lb uranium as the base case in the PEA, giving it a catchy 35% IRR, post-tax. Yet current uranium prices are a lot lower in spot and contract markets and have been so for years.

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